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Spring 2024 - ECO402 - 1
Spring 2024 - ECO402 - 1
MICROECONOMICS (ECO402)
ASSIGNMENT
DUE DATE: MAY 07, 2024
MARKS: 10
ASSIGNMENT:
The Case:
In recent years, the real estate market in Pakistan has faced significant challenges, leading
to a noticeable decline. Several factors have contributed to this downturn, including
economic instability, political uncertainty, changes in government policies, a decrease in
consumers’ income, and the impact of the COVID-19 pandemic. These factors have
collectively led to decreased demand for properties, a slowdown in construction activity,
and a decrease in property prices. Suppose the demand and supply equations of
residential property of a newly established housing society are as follows:
Qd=700,000−5P
Qs=100,000+11P
Where:
Requirements:
I. Using demand and supply equations, calculate the equilibrium price and quantity
of residential property of a newly established housing society.
II. Graphically illustrate the impact of an increase in consumers’ income on the
demand curve, equilibrium price, and equilibrium quantity of residential property.
III. Only for this part, consider the hypothetical data of quantity supplied of
residential property of a newly established housing society at given market prices
in the table below:
Price of Quantity
residential supplied
property per (number of
Marla (in residential
rupees) plots)
35,000 95,000
40,000 105,000
Using the data in the table, calculate the price elasticity of supply of residential property
when the price increases from Rs. 35,000 to Rs. 40,000. Also, interpret the result.
(Marks = 3+2+5)
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Dear students!